I HATE TO QUOTE from a previous article, and perhaps people are not reading what I write. Perhaps it is a whole heap of rubbish. I said in a previous article captioned Time To Unite: “Here are some of the ‘rebus in arduis’ (hard times).
“The US$150 million which we borrowed from Trinidad in order to pay the upcoming US$100 million debt may not be enough, and we would need to go to the market again. We have scraped the bottom of the barrel for local currency, evidenced by the borrowings of the Government by way of bonds, Treasury bills and debentures from the Central Bank, commercial banks, the National Insurance Scheme and the general public.”
I am not glad to be right, but I would be glad if the powers that be follow the path that the Irish, British, Greek and Spanish governments are pursuing. We are to “retreat and come again”. This means that we should accept that we are in pucketary and that despite the rating of S&P there is something amiss.
Obviously the US$150 million that we borrowed from Trinidad was needed otherwise. Did we succeed when we went to the market for the US$200 million? Is the market accepting our current rating? Did we have to rely on the current lead banker to rescue us with a short-term loan to fill a long-term hole at the eleventh hour?
Are we now scrambling to save our reputation from defaulting on our debt? Is this indicative of the status quo – the rebus in arduis? Is it right to say that borrowing of the US$100 million was unnecessary in the first place? If that were so, it would have been parked somewhere.
Remedy. Bite the bullet. If these questions contain an ounce of truth then the people must know that we have to cut back on social programmes and make accommodation to reduce salaries and wages before it is too late.
The Keynesian approach of our Government to the economic crisis may have been a way of keeping the economy boiling for a while, but what happens after our Government has drowned itself in debt? How are we going to get out of the quagmire of sinking sand? Each of the possible ways is deleterious to the people – middle class and poor.
We can tax the people hoping to increase Government revenue. We can scrap the Community Councils that may be possible vote catchers or breeding grounds for “dons” and gangs. After the draconian dose of taxation in 2008, what else is there to tax?
Indeed, less tax receipts might result. We can increase our take of tourism so that Government’s share from the various beneficiaries can be “souped” up. That depends on the external forces that drive our tourism. Europe, including Britain, is in a bad state.
Then there is the possibility of inflation. Can we use inflationary processes to get the Government out of its pickle? Let me explain. If Government increases taxation at its ports and on goods locally, can it recoup to help its deficit? But that would be a mighty price to pay politically.
Perhaps that may be the best thing to do. Perhaps that would reduce foreign exchange spending and cause our people to be more reliant on what I perceive to be our saviour in times of trial: agriculture. We produce or we starve.
We have enough land to feed ourselves, and what we do not produce we can import from Guyana, or Dominica, or St Lucia who can put their banana land to profitable use instead of griping over how Europe and the Americans interest “lampse” them.
Unlike S&P, I do not feel that a speedy recovery will be experienced by the United States or Europe. They have to a large extent neglected their industrial drive for a financial drive, and that signals reduced productivity.
l Harry Russell is a former banker. Email quijote70@gmail.com
